This 1 Company Is By Far the Largest Contributor to Second-Quarter S&P 500 Earnings Growth
2026-07-30 13:30
•Matthew Benjamin •The Motley Fool
•••••• ••••• Axe Cap view
Alphabet’s Earnings Surge Skews S&P 500 Growth
Alphabet’s huge Q2 beat mainly reflects paper profits from SpaceX, masking S&P 500’s real earnings growth.
Alphabet’s headline $9.11 EPS blew away expectations, but most of the $98 billion gain is on paper, from its stake in SpaceX after the recent IPO. Strip out these unrealized gains, and S&P 500 earnings growth drops sharply from 38% to 26%. For South African investors, this means global equity strength masks underlying softness. The rand’s roughly stable stance versus the dollar also suggests local sentiment isn’t chasing foreign tech momentum blindly. Stocks like Naspers and Prosus, which hold large foreign tech stakes, might not benefit as much as headline S&P figures imply. Until Alphabet’s investments turn real gains into cash flow, Be cautious on broad US tech exposure and watch how USD/ZAR reacts to global liquidity. If the SpaceX valuation falters or AI bets disappoint, Alphabet’s boost to markets fades fast. this is just our opinion and not financial advice
Trim global tech exposure, including Prosus, and keep a close eye on USD/ZAR. Wait for clearer cash earnings signals before adding US-heavy tech. Focus on South African banks for more predictable earnings.
- Prosus
- USD/ZAR
- SpaceX or Anthropic valuations drop
- USD/ZAR volatility spikes due to US rate shifts
6/10
Alphabet delivered a massive earnings beat with $9.11 EPS versus $2.90 expected, becoming the largest contributor to S&P 500 earnings growth for Q2. However, much of the beat ($98 billion) came from unrealized gains on equity holdings, particularly a $94 billion gain on its SpaceX stake following the company's June IPO. Without Alphabet's performance, S&P 500 earnings growth would drop from 37.9% to 25.9%. Alphabet also holds a substantial stake in AI company Anthropic, which could see significant gains when it goes public.
Our take is based on reporting first published by The Motley Fool.